Marijuana Business Magazine September 2019

Marijuana Business Magazine | September 2019 126 Several marijuana retailers cite reasons to discount the extent of employee theft, including state-mandated security procedures and a culture of honesty and trust that limits the problem. While anecdotal evidence suggests employee theft may be declining, it hasn’t necessarily been eliminated, and retailers may want to take preventive steps. “There’s very little (employee) theft,” said Deona Braack, general manager of the Smokin Gun Apothecary in Glendale, Colorado. Braack said what theft still exists is mostly limited to geographic areas with higher crime rates. “After speaking with employees at Smokin Gun, I learned of possible product theft in other shops, but it’s likely due to the area in which the shop is located,” Braack said. Gary Cohen, CEO of Cova Software, a Denver-based point-of-sale (POS) software provider for cannabis retailers, contends employee theft in the cannabis retail sector has become “covert.” Believing employee theft isn’t as much of a problem anymore is “wishful think- ing,” Cohen said. Covert practices, he added, range from employees giving discounts to friends and customers to encourage bigger tips to taking small amounts of cash, usually less than $20. Changing permissions in the POS system is another way employees can steal. Cohen points to one case in which an assistant manager at a client’s store was under pressure to improve her performance. To do so, she changed the permissions settings on the store’s POS system, enabling her to offer discounts and drive up sales. Whatever the extent of employee theft, Cohen suggests analyzing POS systems data to detect it. Doing so may reveal certain patterns, he said—for example, small amounts that go missing from the cash drawer or refunds transacted first thing in the morning, when the rest of the staff isn’t around to witness a customer making the transaction. Anecdotal evidence suggests employee theft in the cannabis retail sector may be declining, but the problem has not necessarily been eliminated. Instead, security experts say such thievery is more “covert” and “motivated”—for example, small amounts that go missing from the cash drawer or refunds transacted first thing in the morning, when the rest of the staff isn’t around. They suggest the following preventive measures: • Pay staff an adequate wage— preferably above market rate—to discourage thievery. • Analyze point-of-sale (POS) systems data to detect suspicious transactions, such as early morning refunds. • Conduct frequent inventory counts and audits. Use key cards or biometric locks to track access where product is stored. • Prohibit anyone other than store owners/managers from setting access permissions in the point-of- sale system. • Make sure employees are aware of risk—not only in terms of external threats but also the difficulty of circumventing internal security systems and their own liability, should they be discovered stealing. Is employee theft in the cannabis industry a curse that’s been cured—or a problem that’s taken on a new, more covert form requiring special attention from retailers? Gary Cohen. Courtesy Photo Deona Braack. Courtesy Photo Covert Curse